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30 Great Places to Retire: A Journal E-Book

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Read 30 of Encore's most exciting profiles of retirement destinations across the U.S. and overseas, complete with photos and quick facts for easy comparisons. The e-book, which can be viewed on all devices, is available for $3.99 at WSJ.com/eRetire, or on Amazon Kindle, Apple's iBooks or Barnes & Noble's NOOK Book Store.

Chances are that your nest egg and preparations for later life need more work than your physical condition. Two-thirds of surveyed workers in 2012 said they are a lot (37%) or a little (30%) behind in planning and saving for retirement, the Employee Benefit Research Institute reports. Those who believe they're on track are down to 22% from 37% in 2005.

The seeming magnitude of the task stops many people from taking action, but it's almost never too late to start. More tools and services than ever are available. And financial planners, having guided millions across the retirement threshold in recent years, are better able to pinpoint the obstacles ahead.

To help, we've come up with seven resolutions. Adopting any one of these, even if you're within 10 years of retiring, can help get your planning on track. Provided you get started.

Vote

1. I Will Track My Spending

For many, budgeting is like exercising or dieting. "It's good for you, but hard to stick with," says Kent Smetters, a professor of business economics and public policy at University of Pennsylvania's Wharton School.

Yet without knowing how much you spend, it's virtually impossible to figure out how much you'll need to save for retirement. Perhaps the easiest way to track your spending is to put everything you buy on a credit card, since your monthly statement will show where the money is going, says Charles Farrell, a financial planner in Denver.

But if you want to learn to stick with a budget over time, a growing number of largely free online tools and mobile apps can help. Services offered by banks and companies, including
Intuit
Inc.
's Mint.com, LearnVest, and Yodlee Inc.'s MoneyCenter, import and aggregate data from your credit cards, loans, and bank, brokerage and 401(k) accounts. They break down your spending into categories, such as utilities or groceries, and some can even track how much you spend at specific stores or on specific items, like coffee. Once you know how much is going out and for what, it becomes much easier to pinpoint cuts that can make a real difference.

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Stephen Webster

Some also send you email alerts when you're in danger of exceeding your budget or use customized emails to prod users to change their savings and investing habits. HelloWallet, which was introduced last year and costs $8.95 a month, offers customized advice on how much to save for big-ticket items, including cars. It also will tell you how much you need to save for health care in retirement, and is planning, starting this year, to base that recommendation, in part, on how often you eat in fast-food restaurants.

2. I Will Automate My Savings

If you are trying to boost your savings rate ahead of retirement—and who isn't?—there is a simple way to force yourself to save more: Set up automated transfers from your checking to your investment and retirement accounts.

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"If you automate your savings, you can save and invest a significant amount without ever missing the money," says Ramit Sethi, a blogger and author of "I Will Teach You To Be Rich."

Mr. Sethi says it should take about a week for you, or your adviser, to set up an automated system of transfers. The first step, he says, is to make a list of your accounts, including savings accounts, IRAs, 529 college savings plans and brokerage accounts, along with user names and passwords. Then, link each to your checking account, from which your automatic transfers will be made. (For more detail, see www.iwillteachyoutoberich.com/automate-your-personal-finances/)

Two years ago, Michael Roth, 58 years old, began funneling $20 a week from his checking account into a Vanguard account earmarked for home repairs and a new car. Research shows that many people get tripped up in retirement when they fail to budget for such big-ticket items.

"I didn't want to use my emergency fund as a piggy bank," says Mr. Roth, an Oakland, Calif., designer of voice and data telecommunications networks. He started small and gradually raised his savings, in $10 increments, to $140 a week. "I kick myself for not doing it sooner," he says.

3. I Will Talk With My Spouse. Really.

When it comes to planning for retirement, saving money is only half the battle. The other half? Deciding how you and your spouse will spend it.

According to a survey of 648 couples Fidelity Investments published in 2011, 47% to 60% disagree on such important issues as when they will retire and whether they will work in retirement.

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It's no surprise, then, that a growing number of financial advisers are helping couples think about the softer side of retirement planning.

George Kinder, a certified financial planner and founder of the Kinder Institute of Life Planning, trains advisers to ask clients three questions: What would you do if you had all the time and money in the world? How would you live if you knew you had only five to 10 years left? And what would you most regret if you died tomorrow?

"The third question is key," Mr. Kinder says. "It is fundamentally important not to compromise on something that, if unfulfilled, would leave you with a deep regret."

Mr. Kinder recalls a Massachusetts couple in their 50s who had seemingly incompatible interests. While the newly retired husband wanted to sail around the world, the wife was prone to seasickness and was unready to give up her gardening business. Their solution: He spent three months sailing off the coasts of Ireland and England, and when she joined him, they stayed in port and visited gardens.

4. I Will Maximize My Social Security Payout

Many people put in for Social Security soon after retiring. But by devising a strategy for claiming benefits, you may be able to significantly increase the amount you, or your surviving spouse, stand to receive.

"For many couples, it's pretty easy to find a way to get $100,000 more out of the government," says
Jason Scott,
managing director of the Retiree Research Center at
Financial Engines
Inc.,
a Sunnyvale, Calif., company that manages 401(k) accounts.

The National Association of Personal Financial Advisors, the Garrett Planning Network and SocialSecurityTiming.com, which publishes software for advisers, can recommend advisers who provide Social Security advice as part of an overall financial plan. Fidelity plans to integrate Social Security advice into some of its products and tools, and Financial Engines is exploring adding similar services.

Products such as SocialSecurityChoices.com, SocialSecuritySolutions.com and MaximizeMySocialSecurity.com charge from $20 to $250 for Web-based tools that identify the claiming strategy likely to yield the most over your life span. To take into account how different strategies will affect your taxes, you'll have to buy additional online programs, available from companies affiliated with MaximizeMySocialSecurity and SocialSecuritySolutions, for up to $500.

5. I Will Use the Tax Code to My Advantage

When spending retirement savings, the conventional wisdom calls for draining taxable bank and brokerage accounts first, to give the money in tax-deferred 401(k)s and IRAs more time to grow. Tax-free Roth IRAs should be left for last.

But some retirees, particularly those with large IRA balances, may find they can save on taxes by tapping these accounts simultaneously.

The goal is to start with three types of accounts: regular IRAs or 401(k)s; Roth IRAs or 401(k)s; and taxable bank and brokerage accounts. If you don't have a Roth, you may be able to shift money into one without paying a big tax bill, says William Baldwin, president of Pillar Financial Advisors in Waltham, Mass. The key, he says, is to act before you turn 70½, when owners of tax-deferred IRAs must start withdrawing money from these accounts, which often pushes them into higher tax brackets.

To make the strategy work, plan to meet your living expenses after you retire but before you turn 70½ with the funds in your bank and brokerage accounts. (Many retirees keep enough in these accounts to defray up to five years of living expenses.) You probably won't pay much tax on this money, since bonds, CDs and cash haven't earned much interest in recent years.

This will give you an opportunity to convert money from your regular IRA to a Roth IRA while in a lower-than-normal federal and state income-tax bracket, says Mr. Baldwin. The goal, he says, is to convert just enough to fully use your standard deduction and exemptions and avoid pushing yourself into a higher bracket. (If the assets you convert lose value, there is a way to undo the conversion and wipe out the tax bill.)

Thanks to these conversions, your Roth IRA should steadily grow, while your tax-deferred accounts shrink. With less money in your tax-deferred IRAs, your required minimum distributions will be lower—and so will the tax bills they create.

6. I Will Buy a Pension

As you approach retirement, how much of your money should be in stocks versus bonds?

Financial advisers usually address that issue by probing a client's "risk tolerance," or propensity to stick with stocks when they fall. But as 2008 made clear, "most people have no clue what their risk tolerance is," says Wharton's Prof. Smetters.

A growing number of advisers are now recommending that retirees adopt an investment approach popular with pension funds. Often called "liability-matching" investing, the concept is simple: Retirees shouldn't take risks with the money they will need for essential expenses.

William Bernstein, author of books including "The Intelligent Asset Allocator," says retirees should think of their portfolios in two parts. The first should contain enough to cover "at least 20 to 25 years" of basic living expenses, and be invested in annuities, bonds or CDs.

The rest should be invested in a way that is consistent with when you'll need the money, says Mr. Bernstein. For example, savings earmarked for a trip to Paris next year should be invested more conservatively than a bequest for your alma mater.

Perhaps the best way to "buy" an annuity, Mr. Bernstein says, is to defer Social Security, since payouts rise by an average of 7.32% in each year you delay between ages 62 and 70. While doing so will require you to live on your other assets, widows, divorcées and the spouse with lower earnings may be able to collect survivor or spousal benefits while deferring. If you need more pension-type income than Social Security will provide, consider a conventional annuity or a bond ladder composed of Treasury inflation-protected securities, Mr. Bernstein says.

7. I Will Get Off The Fence About Long-Term Care

According to the Department of Health and Human Services, about 70% of people over age 65 will eventually need some type of long-term-care services. But with insurers raising premiums on these policies, consumers "are experiencing sticker shock," says Michael Kitces, director of research at Pinnacle Advisory Group Inc., a wealth-management firm in Columbia, Md.

If you think you may need the coverage, it doesn't pay to wait. For each year you delay, premiums generally rise by 8% to 12%, just because you are older, says Dawn Helwig, a principal and consulting actuary at Seattle-based Milliman Inc. Moreover, with industry giant
Genworth Financial
Inc.
planning to introduce gender-based pricing later this year, premiums for women seeking individual coverage are likely to jump 20% to 40%.

Premiums on policies issued today should be more stable than has been the case with older policies, says Ms. Helwig. In part, that is because carriers now realize that fewer policyholders are canceling this coverage than they had initially expected. Still, if interest rates remain low for a prolonged period, she adds, all bets are off.

Spouses can gain flexibility by sharing benefits. Consider a couple with two policies that each covers up to three years of benefits. If the policies are linked and the husband needs four years of coverage, he can use his policy plus a year of his wife's coverage. The downside, of course, is that this would leave the wife with only two years of benefits.

Ms. Tergesen is a staff reporter for The Wall Street Journal in New York. She can be reached at encore@wsj.com.

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